The Art & Science of Choosing an Ad Agency
Every dealership from the smallest corner used-car lot to largest multi-location dealerships needs marketing to bring customers to their sales floors. Other than their need for marketing, however, their plans will look very different. Advertising a 5 location dealership group in Chicago will be very different from a single location store in Des Moines, but even two similar dealerships may have very different marketing needs.
Marketing a dealership requires a different set of skills from selling cars. So, while a few dealerships have found success doing their own marketing, most find that they need the expertise of a advertising agency. It’s just a matter how your time can best be spent. Advertising a dealership requires expertise in media buying and producing commercials for both television and online, not to mention social media, search, and everything else that’s necessary to attract modern consumers. Dealers could spend their time learning these skills and everything else that is required of an advertising expert, but for most their time is better spent selling cars.
Deciding you need an advertising agency is just the first step though. Next you need to find the agency that is right for your dealership. Dealership marketing is different from other industries and what dealerships need varies greatly from store to store, so it’s important that you don’t just find a great agency, but one that is the right fit for you.
There is a lot to consider when choosing an ad agency, from do you need one in the first place to whether you need a separate firm for your offline and online marketing. To help sort out these and other questions about finding the right marketing partner for your dealership, we spoke with several experts: David Regn, cofounder of Stream Companies, Jimmy Vee and Travis Miller, founders of Rich Dealers®, and Jason Wiley, director of sales for Haystak Digital Marketing. Their opinions may differ, but what works in one dealership might not work in another, so take a look at what they had to say and visit www.DealerMarketing.com to send us your thoughts.
DMM: Does every dealership need an advertising agency, regardless of size or can some dealerships manage their own marketing in house?
David Regn: The majority of the population performs better with a coach or a trusted advisor. The same is true with a dealership/agency partnership. One the greatest microeconomic principals is opportunity cost and our biggest asset is time. I am sure many could do it very well, but to what end? I certainly don’t believe it is a cost and time saver. Does the dealer have the time, skill set and energy for planning and buying media, optimizing keywords, designing ads, writing and producing TV commercials, coding email blasts, updating web specials, designing direct mail pieces and managing paid search bids, lost impressions share and conversion optimization? Or do you want to sell more cars and make more gross?
Jimmy Vee and Travis Miller: Any dealership can manage its own marketing. What should be considered, however, is A) Whether or not managing your marketing is the highest and best use of your time, and B) Whether or not you possess the inclination and ability to innovate new marketing strategies on a perpetual, ongoing basis. Frequently, dealership owners and managers elect to handle their marketing and advertising themselves. But at what expense?
In our experience most dealerships are ripe for improvement and refinement of processes and culture. These changes require strong leadership. If a dealership’s executive staff is busy with marketing they may neglect other opportunities to effect important change in the organization. If a dealership is managing their marketing internally, but the executive staff is not busy with marketing they’re neglecting the marketing.
Jason Wiley: No, every dealership does not need a full-blown advertising agency. There is no “perfect formula” for all dealers to follow. Each dealership is individual, with its own individual needs, concerns, budgets, marketing strategy, demographics, manufacturer incentives, and a host of other factors that weigh into whether or not it should utilize the services of an ad agency.
DMM: What skills matter most for an auto dealership advertising agency?
JV/TM: The most critical requirement of an automotive advertising agency is the ability to see beyond what everyone else is doing and innovate unique and creative solutions to the traffic and sales-related problems facing dealerships. So much dealership advertising is copy-cat, at worst, or unimaginative, at best. Herd mentality is dangerous for dealerships, so they should seek an agency that stands apart from the crowd and is equipped to lead their dealership to a distinctive competitive advantage, preferably other than low price.
JW: Communication, communication, communication. When a dealer enters into an agreement for an ad agency to handle their advertising and marketing, it is imperative that both sides view the business endeavor as an absolute relationship. It takes open, honest, transparent and constant communication. It takes patience, understanding, proper goal setting, proper expectation setting, and execution. With this trust and foundation, it then takes a combination of strategy for both digital and traditional marketing, and ultimately, it is up to the ad agency to execute, follow through, educate and constantly communicate.
- Do they love what they do? Hands down the most important. If they love what they do then they will love working with you.
- Ability to keep a dealer committed to a plan that will generate long term results (by long term I mean over 60 days).
- Patience – In retail automotive fast is not fast enough. Your agency must understand this or the relationship will not be mutually beneficial.
- Research – So many decisions are made based on personal preferences. Make decisions based on facts of your market and your target market.
- Accessibility – Whether it’s by phone, email or text you need to be able to get and give answers fast.
- Perseverance – To consistently look at the numbers and make business and not emotional decisions.
- Trust – hands down the foundation of any agency worth your time.
DMM: How is advertising an auto dealership different from advertising other businesses?
JW: The auto industry is very unique. It takes a balance of short-term sales goals, long-term marketing goals, communication ,and consistent high-level execution to increase a dealer’s success within a given market. The auto industry also has thousands of different vendors all vying for portions of a dealership’s budget, and often times multiple decision makers to coordinate strategy with. The modern ad agency needs to understand all portions of a dealership’s operations and they need to be able to help a dealership way beyond just basic advertising and marketing goals.
- Retail advertising is about results. We live and die by the results of every day, 30 days at a time, twelve months a year.
- Manufacturer Guidelines – ignore these and you could be out $1,000s.
- State Guidelines – Ignore these and you could be out of your market.
- FTC Guidelines – ignore these and you could be out of a dealership.
- Co-op programs – constantly evolving, always changing.
It’s important that your agency understands all these topics and guides you through the necessary steps to make your automotive advertising compliant, accountable, and successful.
JV/TM: The “Miracle of the Car Business” is that just about everybody wants a nicer, newer® car. The same can’t be said for most other items. This presents a precious opportunity for dealerships—they don’t have to limit their marketing to only those people actively comparison-shopping in the moment, because everyone is a potential customer.
DMM: What factors should dealers consider when setting their monthly marketing budget?
- First and foremost…what are the dealerships goals?
- Size of market
- Price of market
- Competitive analysis
- Market opportunities
- Budget- percent of gross or cost per unit sold
- Am I being realistic?
JV/TM: Dealership executives should consider the true value of a sale (including immediate front and back-end profit, residual service-related profit, and the potential value of repeat and referral business) and derive from that value an acceptable per-car, advertising investment. Budgets should be set based on the goal for the period, not the results of the previous period. In other words, if last month a dealership sold 100 cars, but this month the goal is 120 cars, the advertising budget should be based on the 120 car goal.
JW: First and foremost, dealers have to look at “push” vs. “pull” advertising media and they have to think about which ad media they are going to invest in based upon reach, target-ability, and cost. Any effective ad medium, whether it be digital or traditional, should have a high reach, high target ability, and low cost. When dealers start to look at their ad media through that lens, they often embark upon the exciting journey of doing things differently than previous generations.
From there, a lot of things haven’t changed. Dealers need to think of advertising where consumers are: where do people go to research and find information about vehicles? Start there, then formulate your long term marketing strategies. Too often, dealers approach their advertising based upon what used to work, and they invest in ad media that market long term rather than sell now. That’s why, in my opinion, there are a lot of opportunities for new thinkers and innovative companies to help rewrite how a dealership invests budget and ultimately sells more cars.
DMM: What metrics should dealerships expect the ad agency to provide?
JV/TM: Too often activity will masquerade as accomplishment, all dressed up in fancy reports that show how well everything is working. Whether or not the marketing is working is better determined from dealership metrics than from agency metrics.
What metrics the agency provides the dealership is less important than the metrics the dealership provides the agency. We ask clients to feedback to us on a regular (weekly) basis the following:
- Marketing spend separated by media (in case there is any we’re unaware of)
- Opportunity Count, which includes the total number of web leads, separated by type and source, inventory inquiries, online credit apps, in-bound phone calls, walk-ins
- Total showroom visits
- Total write-ups
- Total credit applications
- New sold, used sold
- Average front-end gross, average back-end gross, total gross per vehicle
- New inventory
- Used inventory
- Used inventory ACV
- Average age of used inventory
- Total selling gross
- Fixed gross
- Sales divided by total opportunities
- Sales divided by total visits
- Sales divided by credit apps
- Marketing cost per vehicle sold
- Return on investment
Having this information allows us to predict future problems or opportunities and to get important feedback on the effectiveness of our campaigns. We also return to them process-oriented recommendations that we may see based on the metrics.
JW: Good ad agencies should have a comprehensive way to prove ROI. This could be based upon a lot of different items, depending upon which services the ad agency handles for a dealership. When judging digital, dealers should look for complete transparency in reporting: don’t just use one report for all answers. Get access to AdWords. Have Google analytics installed and goals assigned.
From there, dealers should look at increases in: 1.) overall traffic and unique visitor count on their tier three website, 2.) SRP and VDP views and 3.) time on site, page views, map and direction views, and phone calls. When it comes to traditional, again, having transparency is an absolute critical component. How much does each ad medium truly cost? How much goes into production, creative and air time? Have you negotiated the absolute best price possible? Do you have an accurate way to track all your affidavits? It’s not easy to manage all of these aspects, but the truly successful ad agencies have all of this and transparency for their clients.
- Website Sessions/Visits (non-bot)
- Website Leads
- Soft Conversions
- 3rd Party Leads
- Phone Calls
- Closing percent on the above
A true agency partner would not stop there…they would want to know and have an impact on closing percent sales volume, RO count, gross, and profitability.
DMM: Is it better for a dealership to have one agency to handle all of their marketing or should they have different agencies for traditional and internet marketing? Why?
JW: There is no “one size fits all” answer or company for every dealership. I do personally believe that companies that do everything become jacks of all trades and masters of none. Today’s automotive industry is a lot more complicated for a dealership. Dealers can no longer just drop a ton of budget towards four traditional media and expect to be successful. Today, they have the dealership website, third-party sites, tier one and two sites, SEM, SEO, social, reputation management, local listings, display, retargeting, previous customer strategies, conquest strategies, etc. etc. etc…On top of all this, the digital marketing space is innovating and changing at an unprecedented rate. Consumer shopping behavior is evolving rapidly. It’s very difficult for one company to manage and master every aspect of a dealer’s advertising and marketing game plan.
DR: Assuming an agency is truly integrated, one agency is better. The reason is two-fold: first, there are so many moving parts in a dealer’s budget that evaluating each item takes an agnostic point of view to determine the best return for the dealership. Second, having a digital and traditional agency is a constant battle of budget control and playing the “blame game”. This is not to say you cannot learn from other parties, but the cost of information drain and spreading your management staff thin should be your greatest concern. Your managers and team need to sell and service cars—not be vendor managers. Choose one partner wisely and hold each other accountable! One Company = One Message.
JV/TM: Traditional and internet marketing are not two separate items. Everything is marketing, and marketing is everything. Using multiple agencies will inevitably lead to message confusion, contradiction and unnecessary expense (both in agency fees and media spend). A single company should be equipped to help with all external communication and can plan for complete congruency of messaging and strategy across all media.
Let us know what you think!
We want to hear from you! What has your experience been with auto dealership advertising agencies? What worked, what didn’t? Visit www.DealerMarketing.com and send us your thoughts.